China’s total box office takings have reportedly hit US$6.79 billion in the first eight months of 2018, a US$1 billion increase on the same time in 2017. Hollywood films had long dominated the Chinese box office, but recent successes of domestic films have suggested a shift in preferences of Chinese audiences.

While there is no argument that some domestic films have been very well received of late and that the industry has made great advances in production quality, discussing China’s box office trends continues to be less straightforward than simply assuming this is “what audiences want”.

China’s entertainment industry is a complicated business, and authorities have struggled to keep up with the speed of developments.

The Hollywood dilemma

If you were a regular Chinese filmgoer, you could easily be forgiven for thinking the only type of film America knows how to produce are high intensity fantasy/action films with deafening audio, heart stopping CGI, talking robots and characters charged with superpowers.

The Chinese film market though, rarely features alternative genres from America. Social and political dramas, or even a simple romantic comedy that portrays human experience, motivations, and concerns in “realistic” settings, rarely make China’s distribution approval lists. And when the token Oscar winner deemed appropriate is released in China, there are no guarantees the film will not be heavily censored.

For tech-savvy film enthusiasts who prefer to see films in uncensored form, illegal downloading is a solution. Estimates range, but the MPAA claims that approximately 90% of viewership of US film and TV content comes from illegal sources.

For the Chinese film enthusiast who isn’t tech-savvy, domestic dramas and romances, and films from Bollywood and other industries, now provide an alternative to Hollywood’s “intensity”.

Chinese audiences, like any others, want good stories that make them think, learn, feel, and connect. Until restrictions on foreign film imports are revised, allowing both cinema chains and US film importers to take risks in offering diversity in imported and legal content, the true impression of Hollywood’s value to the Chinese film market will continue to go unaccounted for in the official data.

China’s cinema chain expansion

Chinese audiences are not a homogenous group. There is a clear distinction between the film watching habits of China’s privileged urban young adults in cities like Beijing and Shanghai, and less privileged Chinese that migrate to urban areas for work or remain in lower tiered cities or rural China.

While wealthy, educated, urbanites regularly consume Hollywood blockbusters and foreign cinema, my own research found less privileged Chinese overwhelmingly prefer Chinese language film productions, and most have never sought out a foreign film to watch. Media literacy in China is still developing, and many less privileged Chinese prefer to watch films set in, and reflective of, their own realities. These consumers have a preference for local language cinema with Chinese subtitles that help them make sense of the action portrayed on screen and creates value for the time they invest in watching.

As China’s cinema chains expand into lower tiered cities, and with ticket prices remaining accessible through discount ticket apps (albeit maybe not for long), the filmgoing preferences of Chinese audiences outside top tier cities will be important for cinema programmers. Due to a combination Hollywood fatigue and the expansion of cinema chains across the country, homegrown films may have real impact on box office revenue.

Box office manipulation

But the numbers are unreliable: box office fraud has long been a point of concern in China. After the introduction of China’s new film law, China’s authorities punished over 300 cinemas in March 2017 for gaming the market. Claims of under-reporting of ticket sales of Hollywood blockbusters and pocketing profits, to the shifting of ticket sales from popular films to lesser performing domestic films that have more agreeable profit sharing agreements, have long been a concern for both domestic and foreign film makers.

Recent claims point to the practice of film investors purchasing tickets to their own films to increase the appearance of high performing content. Seemingly, strong box office performance correlates with increased share sales (unrelated to the film production) for investor companies. Domestic B-grade flops may in fact perform well at the box office while cinemas remain empty.

Claims of fake ratings in the TV entertainment sector are also surfacing. Popular Chinese film directors such as Lu Chuan have come out in support of an investigation into the TV industry by Chinese authorities, so it may not be long before official attention turns to whether the film industry also dabbles in such activities.

China’s box office and entertainment industry is a complicated business, and authorities have struggled to keep up with the speed of developments. No one denies the growth of the Chinese box office and its potential for both local and foreign films to succeed. Contextualising the data, however, is challenging.